Legal Definitions - Freestone rider

Definition: A freestone rider is a term used in the oil and gas industry to refer to a leaseholder who is entitled to receive a share of the profits from the sale of oil or gas extracted from a particular property. This term is also known as the Pugh clause.

Example: Let's say that John owns a piece of land that has oil reserves. He leases the land to an oil company, and the lease agreement includes a freestone rider clause. This means that John will receive a percentage of the profits from the sale of oil extracted from his land, even if the oil company drills on adjacent properties.

Explanation: The freestone rider clause is designed to protect the leaseholder's interests in situations where the oil company drills on adjacent properties. Without this clause, the leaseholder may not receive any profits from the sale of oil extracted from their property if the oil company is also extracting oil from neighboring properties. The freestone rider clause ensures that the leaseholder is entitled to a share of the profits regardless of where the oil is extracted from.